by JQ Adams

Created on: February 28, 2007   Last Updated: April 18, 2007

The idea of a credit card is a peculiar notion that has only come about in the last fifty years. Instead of paying for purchases with wealth that we already have, we are now borrowing money for every day purchases, even things as quick trip to McDonalds or a bottle of pop from a vending machine. Debt has become a societal norm and it's here to stay. There's nothing inherently wrong with debt, however when debt is misused, it can become a major financial nightmare. Credit cards are one of the most abused and misused financial products on the market. Here are ten facts that the credit card companies would prefer that you didn't know.

1. Universal Default Provisions Even if you are making your payments as agreed with one credit card, but happen to be late on another payment or if your credit score happens to go down a bit, the credit card company could jump your interest rate by upwards of an additional 20%. You could be paying around 14% for a decent credit card, but if another bank thinks you missed a payment on an entirely different loan, your rate could jump upwards of 35%!

2. Very Few Pay Their Cards Off According to PBS Frontline, there are 35 million Americans who only pay the minimum payment on their credit cards. These people could be paying for their everyday purchases and associated finance charges for decades before paying it off. By federal law, the banks only have to require you to make a minimum payment which takes care of all the fees per the month and one percent of the principal balance. Paying this minimum amount will cause many Americans to pay three or four times what they should have for a product

3. There's No Maximum Interest Rate Credit card companies specifically state in just about every card holder agreement that they can change your rate as they please and without notice. Most major banks reside in states that have no usury rate either, so in theory they could charge you whatever rate they pleased without telling you and it would be entirely legal to do so.

4. Credit Card Debt Correlates to Bankruptcy When people file bankruptcy, more often than not they have extremely high credit card balances which are just beating them up financially. They get into some sort of mess and charge everything to their credit cards, making the problem worse. There is a statistical correlation between having high credit-card debt and filing bankruptcy. The Motley Fool states that 1,300,000 credit card users filed bankruptcy in 2005.

5. Late Payment Fiascos

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